March 13, 2018
Mortgage rates fell today following a tame read on inflation as well as the announcement of Rex Tillerson's departure from the White House. The Consumer Price Index--the most widely followed economic report on consumer-level inflation--showed prices moving up 0.2% in February (rounded up from 0.1501%). The median forecast called for a 0.2% increase.
When inflation is falling (or rising more slowly), it tends to benefit bond markets, thus pushing rates lower. Given that the inflation data was fairly close to forecasts, it didn't have any sort of extreme impact today, but it added some downward pressure on rates. The Tillerson news came out a few minutes later. Markets reacted as they typically do to news that creates uncertainty with stocks and rates moving lower together. But since Tillerson's departure wasn't a huge surprise, it too failed to cause a profound move lower in rates.
Even then, we have to separate the intraday rate movement that exists in bond markets from the 1-3x per day rate sheet changes from mortgage lenders. As of this afternoon, most lenders are still on their first rate sheet of the day. Even so, those rates had improved enough to make them the lowest in more than a week. That said, many borrowers will still see the same NOTE rates as yesterday with the improvement coming in the form of lower upfront costs or a higher lender credit (aka, lower EFFECTIVE rate, not lower NOTE rate).
Loan Originator Perspective
More stagnation in bond markets today, as MBS prices and mortgage rates hovered in recent ranges. This week's bond auctions are now behind us. Our current range seems fairly stable, but I'm still not seeing any motivation for marked market improvement. I'll keep locking early until I do. -Ted Rood, Senior Originator
Nice to see bonds in the green today. As much as i want to say float, i just cannot. Everytime bonds manage to rally, they quickly give back the gains. I am seeing improved rate sheets today versus yesterday, so my clients and i agree that locking is the wise decision. -Victor Burek, Churchill Mortgage
Today's Most Prevalent Rates
- 30YR FIXED - 4.5-4.625%
- FHA/VA - 4.375%
- 15 YEAR FIXED - 3.875%
- 5 YEAR ARMS - 3.5-3.75% depending on the lender
Ongoing Lock/Float Considerations
- 2017 had proven to be a relatively good year for mortgage rates despite widespread expectations for a stronger push higher after the presidential election in late 2016.
- While rates remain low in absolute terms, they moved higher in a more threatening way heading into the beginning of 2018
- The scariest part of the move higher looks like it ended as of early February, and rates have been generally sideways since then
- Even so, the potential remains for more weakness (i.e. higher rates). It makes more sense to remain defensive (i.e. more inclined to lock) until we've seen a more convincing shift lower.
- Rates discussed refer to the most frequently-quoted, conforming, conventional 30yr fixed rate for top tier borrowers among average to well-priced lenders. The rates generally assume little-to-no origination or discount except as noted when applicable. Rates appearing on this page are "effective rates" that take day-to-day changes in upfront costs into consideration.